Is Albania the new hotspot for British property investors?
When you land in Albania’s capital city, Tirana, you instantly see it has experienced something of a rebirth.
Gone are the ruined buildings, remnants of the war that ripped through the region in the late nineties. In their place stand brightly coloured modern structures housing a young, thriving city.
With its virgin beaches, fascinating ancient sites and dramatic mountain citadels, it is easy to see why this Balkan state is catching the eye of property investors.
Change is everywhere you look; from the party culture in the super trendy Blloku area of Tirana, to the way politicians are driving initiatives to get Albania back on the global radar.
The Parliament recently endorsed the new Socialist-led government of popular former Tirana mayor, Edi Rama, who has pledged to kick-start the economy, fight poverty, create jobs and move the country towards European Union (EU) membership.
As a member of NATO, the country is now officially recognised as a potential EU candidate country and the Government has even hired Tony Blair as an adviser to help get the country into the EU.
Added to this, Lonely Plant called it one of the top ten places to visit in 2011, and the Guardian recently named Albania as one of its top ten beach destinations for 2013.
For those looking for a property investment, Albania has a lot to offer.
Property is affordable compared to the rest of Europe, and importantly, it has yet to be discovered by the masses.
However, this could soon change.
It is just a 2.5 hour direct flight from the UK and numerous other European capitals and boasts a warm year round climate and 200 days of sunshine on average. Unsurprisingly, visitor numbers are up 20% year on year.
Much of Albania’s 380 miles coastline of sandy coves and bays lay undeveloped, although the more popular Southern Riviera from Vlora to Saranda is more discovered.
Investors in the south can get a well-proportioned two bedroom apartment by the beach for as little as €130,000 (£110,000), but prices and quality of the finished products do vary wildly.
Living costs in Albania are also cheap; a meal at some of Tirana’s finest restaurants costs no more than €10 per head.
On paper, Albania looks like it is coming into its own, but there are a few key issues property investors should be wary of.
Some Brits buying in the country have experienced problems over land rights.
There have been numerous issues with property owners seeking compensation for homes they owned before the Communist regime confiscated private land.
According to Reuters, popular holiday operator Club Med bought land in the Southern part of Albania, only to be tangled up for years in disputes with angry locals protesting that the authorities had had no right to allow the foreign business to develop on the land.
The row highlighted the confusion over title to property in post-communist Albania.
Who owns what remains a major challenge to economic progress and returning property to pre-communist owners is mired in corruption and often based on favouritism.
With no national master plan, there are also fears of overdevelopment by people seeking quick returns.
Therefore, Brits who are interested in buying in the Balkan state are advised to buy new apartments and villas which are built to EU standards, and to ensure there are no claims on the land.
A development like the 5* Lalzit Bay, occupying 49 acres on the Adriatic coast and being developed by a British company, is one such scheme offering 900 villas and apartments on a yet unspoilt spot north of the port of Durrës.
A 32 square metre studio apartment in the resort costs just over €35,000 and a 40 metre square villa apartment next to the beach with one bedroom, a large private garden, and potential for a pool costs around €63,000.
Peter Walshe of Lalzit Bay Resort and Spa, says: “Investors have seen Albania as the next emerging European opportunity and we’ve positioned the product as a quality, international product.
“Since starting building we’ve introduced a few mid-price range products including deluxe apartments and villa apartments. Since 2011, the euro has dropped by around 15-20% so more of our European buyers now have more money in their pockets and are keen to spend a little more on the right property – perhaps closer towards the beach or with a bigger garden for example.”
So far, 70% of stock has already been sold, with the developers confident that the rest will soon be taken off their hands. Buyers have come from Albania, Sweden, Britain, Germany, Finnish and handful of other countries.
A hotel is also planned, plus swimming pools, a spa, restaurants, shops and bars. The complex is just 20 minutes from Tirana airport, which is serviced by year-round scheduled BA flights from London (flights cost around £180-£200 return).
The developer estimates that a 2 bed apartment costing €70,000 will generate a rental income of €500 per week over the peak summer months at 75% occupancy – giving an annual gross rental income of €6,000. This is an overall rental yield of 8.57%.
But considering the debacle with Club Med, people still need to make sure it is safe to invest.
Buyers, especially those who want to buy existing Albanian stock and not from a big foreign development, are advised to have a good lawyer who will be able to navigate Albanian property laws and the issues surrounding them.
They should always check that ownership certificates are genuine and consult a real estate professional – there are a handful of international brands operating in the country at present.